Fed Cuts Rates For The Tenth Time

Stocks surged Tuesday on the Federal Reserve’s tenth rate cut this year. Qualcomm fell after the bell after missing estimates and warning.

The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 6 to 157, and the Nasdaq surged 41 at 1835. The S&P 500 climbed 16 to 1118, and the Dow rose 150 to 9591. Volume rose to 1.34 billion shares on the NYSE, and 1.94 billion on the Nasdaq. Advancers led by 20 to 10 on the NYSE, and 20 to 15 on the Nasdaq.

After the close, Qualcomm fell 4 points after missing estimates and warning.

During the day, stocks rallied after the Federal Reserve cut the fed funds rate to its lowest level in 40 years. The discount rate of 1.50 was the lowest since 1954, and matched the low of the 1929-1932 Fed. One more rate cut would take the discount rate to a level last seen in the late 1940s, when the economy was emerging from deflation.

Cisco rose .57 to 18.47 after the company beat pro forma estimates by 2 cents with 4-cent earnings, revenues topped estimates, and the company projected modest sequential growth next quarter. On a GAAP basis, the company lost 4 cents. But the results boosted few other networkers. Juniper and Ciena finished lower.

Register.com , up .17 to 8.20, and TMP Worldwide , up 1.01 to 34.04, also rose after beating estimates.

Microsoft rose 1.51 to 64.78 even though at least six state attorneys general said they will oppose the company’s antitrust settlement with the Justice Department, raising the likelihood that the issue will be decided by a judge.

Hewlett-Packard rose and Compaq fell after the families of the HP founders said they will oppose the merger of the two companies.

Online advertising stocks were strong, led by DoubleClick .

Entrust continued to surge and has now doubled since beating estimates two weeks ago.

Some technical comments on the market: Note: We include charts in the technical market commentary. If you can’t get the charts via the e-mail newsletter version, try this link: http://www.afterhourstrading.com/column.html

The indexes are approaching some significant resistance here. The Nasdaq (first chart) hit a heck of a lot of resistance today. Any further upside is likely to be capped by 1840-1850, and we expect a pullback could begin as soon as tomorrow, a cycle turn date. First support is 1800, and critical support is 1680. The S&P (second chart) is at the top of a broadening top, and also right near its main downtrend line. 1125 looks like maximum upside for now. First support is 1110 and then 1100. The Dow (third chart) refuses to fill its September 10 gap at 9605, coming within 5 points this time. That chart gives the Dow room to 9700-9800 before hitting substantial resistance. First support is 9450-9500. Finally, a look at the bigger picture on the Nasdaq (fourth chart). The Nasdaq appears to be in a wave 4 rally of its fifth wave down off the March 2000 top. One more leg down could lead to an impressive rally. A move above 1934 would negate that scenario. There is one alternative that says the big fifth wave down has yet to begin; the new low in September makes a bullish scenario all but impossible to arrive at for the Nasdaq, at least in Elliott Wave terms.

Special report: For a free introduction to technical chart patterns and an overview of last year’s action in the stock market, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.

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